Spain Limps Toward New Election as Parties Reject Sharing Power

Rodrigo Orihuela, Thomas Gualtieri and Todd White

(Bloomberg) -- Spain is headed for its fourth election in as many years in November as the latest failure to produce a governing alliance highlighted the increasingly fractured state of its politics.

“Spain needs stability, moderation, a progressive government -- it doesn’t need deadlock,” acting Prime Minister Pedro Sanchez said in a stormy parliament session as political opponents assailed him for taking the country to a new ballot. He spoke after King Felipe VI last night concluded there was no candidate with enough support to form a government and set Spain on course for another national vote on Nov. 10.

Spain has become increasingly ungovernable since the conservative People’s Party lost its majority four years ago amid a flurry of corruption scandals. With the Catalan push for independence and the financial crisis helping to splinter the political map, Sanchez failed to piece together a majority despite winning almost twice as many seats as the second-placed PP in last April’s election.

His strategy now will be to peel votes away from the anti-austerity party Podemos and Ciudadanos to give him a stronger hand in government negotiations after the November ballot. Recent polls have shown Sanchez’s appeal to the center-ground is playing well with voters. A new ballot could give the Socialists the chance to boost their number of parliamentary seats from the 123 it has now and edge closer to the 176 needed for an overall majority.

While the economy continues to outpace other major euro-area economies, growth slowed more than expected in the second quarter and the political gridlock leaves Spain with no clear direction as Catalan separatists plot further unrest, the U.K. risks heading for a no-deal Brexit and global trade disputes increase.

Sanchez had failed in a first bid to form a government in July when talks with Podemos collapsed over its demand for significant representation in his government under a formal coalition. Although Sanchez at first signaled he was willing to offer Podemos some ministerial posts, he later backtracked, arguing that a lack of trust made a formal partnership impossible.

Podemos’s leader Pablo Iglesias accused Sanchez of obsessively pursuing absolute power by taking Spain to new elections. He “is committing a historic error of huge dimensions,” Iglesias said on Twitter Tuesday after it became clear a new government couldn’t be formed.

The Socialist leader said a government with Podemos would not have worked because of disputes over power and policy.

“Spaniards have said twice that Spain is progressive and wants to move forward,” Sanchez said in televised comments late on Tuesday. “I ask them to say so again even more clearly.”

Sanchez took power last year when he ousted then-Premier Mariano Rajoy of the People’s Party in a no-confidence motion backed by Podemos and medley of other groups including Catalan separatist parties.

At the head of his own precarious government, Sanchez was forced to call elections for April this year after he failed to pass a budget. Sanchez has said that Podemos should allow him to govern because his political program is progressive and includes many policies the party supports. Podemos and its allies won 42 seats in April’s vote.

(Updates with comment from Sanchez from second paragragh.)

To contact the reporters on this story: Rodrigo Orihuela in Madrid at rorihuela@bloomberg.net;Thomas Gualtieri in Madrid at tgualtieri@bloomberg.net;Todd White in Madrid at twhite2@bloomberg.net

To contact the editors responsible for this story: Charles Penty at cpenty@bloomberg.net, Ben Sills

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